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From a rundown fruit winery in SODO to the dominant player in Northwest Wine:

How Ste. Michelle challenged public preconceptions about wine and created an upstart industry

By Ronald Holden

Ste. Michelle Wine Estates, or SMWE, is the umbrella for a stable of domestic and imported brands, assorted production facilities, and some 3,000 acres of vineyards in three western states. Over the past five decades, SMWE has grown from a barely functioning fruit winery housed in a rundown facility in South Seattle (but whose federal permit to produce alcohol was still valid) into the region's dominant wine company, with a sixty percent share of regionally-produced, fine-wine sales. Its leading brand, Chateau Ste. Michelle, processed grapes from its own vineyards and from dozens of independent growers, and recorded sales of $900 million in 2020.

But that wasn't enough for its parent company, Altria, headquartered in Virginia. Despite owning the dominant wine company in the Pacific Northwest, Altria is a giant tobacco company (yes, tobacco!), whose brands include Philip Morris and Marlboro. Over the past several years it has been making huge investments in new tobacco alternatives like Juul; SMWE, the odd duck in its portfolio, could provide a revenue windfall. When a private equity firm in Manhattan offered to buy its wine business for $1.2 billion, Altria said yes.

But how did Altria come to own SMWE in the first place? In 2008, Altria bought a modest, family-owned, smokeless-tobacco company (Skoal, Copenhagen) called UST, and UST happened to own SMWE. And how did that deal come about? Half a century down the line, it still seems improbable. Here, virtually ignored by Ste. Michelle's official history, is the almost unknown story.

On February 23, 1973, two Seattle men disembarked from an overnight flight on a TWA DC-8 Stratocaster and took a limo from La Guardia airport on Long Island to Greenwich, Connecticut, some 30 miles northeast along the north shore of Long Island Sound. The chairman of a family-owned company that called itself United States Tobacco, a courtly, 52-year-old gent named Louis F. Bantle, who had inherited the company from his father, was expecting them.

The Seattle visitors might have been cast as Mutt and Jeff in a black & white comedy. Joel Klein was six feet, six inches tall, soft-spoken, and serious. Wally Opdycke had a shock of curly black hair but stood almost a foot shorter, ebullient, with mischievous eyes. Bantle offered his visitors a Kool from his silver cigarette case, but they declined. Bantle's company marketed Copenhagen and Skoal smokeless tobacco and had an 80 percent market share. Bantle's innovation at US Tobacco was the creation of flavored Skoal sticks, which at one point were used regularly by 40 percent of American males under the age of 25. "Before you go, you boys have got to see the museum," Bantle said. That would be the two-story brick colonial house in front of the sleek office building that housed UST. On display inside were cigar-store Indians, spittoons, hookas, and a three-foot Meerschaum pipe. "I'll bet that drives Dr. Koop nuts," Klein said, referring to the U.S. Surgeon-General, a lifelong crusader against tobacco.

Walter clore (left), Wally Opdycke (right)

Opdycke and Klein had not come to talk to Bantle about tobacco, however, but about wine. Until the previous year, Opdycke had been a math whiz who worked as a business analyst for Safeco Insurance, which was headquartered in Seattle. Looking for safe investments, Opdycke came upon a rundown company in a south Seattle warehouse called NAWICO, the North American Wine Company, which had not succumbed to Prohibition and still held a federal license to produce alcohol. Opdycke wrote a business plan for Safeco to buy the winery, which had been making fruit wine, and get into the fine wine business like Mondavi in California. There was, Opdycke had heard, a PhD professor named Walter Clore who was going around eastern Washington urging hop farmers and cherry orchardists to uproot their orchards and plant grape vines instead.

Safeco executives were not impressed, however, and turned Opdycke down. But Opdycke was convinced of his plan's merits. He sent in his resignation, rounded up a few friends (among them, super-lawyer Mike Garvey), and bought NAWICO for himself. He knew he'd need a professional wine maker, and asked the dean of the only American university that trained people in the science of fermentation: the University of California at Davis, whose program was known as Budweiser U. That's where Opdycke found Klein, who moved to Seattle in 1975.

The realities of the marketplace soon made it clear that Opdycke would not be able to carry out his plans to start a winery on his own. For one thing, there were very few locally grown wine grapes available. For another, the facilities in south Seattle left much to be desired. But Opdycke had a plan. The federal agency which regulated alcohol also regulated tobacco, the Bureau of Alcohol, Tobacco and Firearms. So Opdycke had read up on tobacco companies, which, it turned out, made huge profits. They could afford to spend millions of dollars on marketing, advertising, promotions, and sponsorships because the margins on their products were astronomical. Insurance companies were satisfied with two and three percent return on their investments because they needed to be safe and predictable. The cost of production for tobacco companies was minuscule by comparison; a two-dollar pouch of Copenhagen cost Bantle seven cents to manufacture. In 1971, the year before Opdycke came calling, US Tobacco had net profits of $250 million on sales of $650 million.

The surprise, today, is that this wasn't more widely known, but US Tobacco, one needs to remember, was privately held and didn't need to disclose its operating statements. Tobacco stocks that were listed on the New York exchange were high fliers: Philip Morris, JP Lorillard, British-American Tobacco.

Klein did a show-and-tell for Bantle, using objects from his desk, to demonstrate the tilt of the earth, its rotation relative to the sun, and the result: during the growing season, the higher latitudes of the Yakima Valley get more daylight hours than Bordeaux or Burgundy, or even California's Napa Valley, and it is sunlight, not heat, that matures the grapes. Yes, winters get really cold, and the vine goes truly dormant, but then it comes back the following spring with astonishing vigor.

Louis F. Bantle

Opdycke talked numbers: fifty million dollars or so to buy land and plant vineyards, another fifty million or so to build new facilities (a showplace headquarters close to Seattle, production facilities adjacent to the vineyards). They would soon realize you can't push wine through a pipeline, they would need to build a nationwide sales and distribution network to create demand and suck out the juice. (Another fifty million or so.) Bantle began nodding appreciatively. But he didn't want to write a check for $100 million; he wanted to buy the company. For half a year's worth of the company's annual profits, UST would dominate a new industry. By the time Opdycke and Klein got back in the limo, they had a deal.

"You effing did it!" one imagines Klein high-fiving Opdycke in the parking lot. "You got this tobacco dude to underwrite the entire Northwest wine industry!" (Four decades later, then-CEO Ted Baseler reiterated this: "Ste. Michelle created the Washington wine industry with UST cash," he told me.)

When the Port of Seattle needed to expand soon thereafter and exercised its right of eminent domain to take over the old Pomerelle facility in South Seattle, Opdycke was not worried. He had his eye on an 85-acre property called Hollywood Farm, outside a bedroom community, Woodinville, east of Lake Washington. It had belonged to Frederick Stimson, the timber baron, and was now for sale. Here Opdycke would build a European-style showplace for his winery, Chateau Ste. Michelle. (Why "Ste. Michelle"? It was Opdycke's daughter, the story goes, who said it was high time to name a winery "for a girl.")

Turns out there's more to that story, too. Wasn't Opdycke's daughter, it was Joe Molz's daughter. Molz was the GM of North American Wine Growers, a decade before Opdycke bought it. At a time when California wineries were selling gallon jugs of "Chablis," Ste. Michelle "sounds French," right? It doesn't matter that there never was a saint named Michelle.

September 2021

 Next month: the end of the line for SMWE.


Ronald Holden, a longtime contributor to seattledining.com, is a local restaurant critic, food blogger, and author of FORKING SEATTLE.


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